1 00:00:03,560 --> 00:00:06,920 Speaker 1: This is Bloomberg surveillance. If we put people back to 2 00:00:06,960 --> 00:00:09,880 Speaker 1: work and drive the unemployment rate down, at some point 3 00:00:10,000 --> 00:00:12,160 Speaker 1: that has to lead to wage growth. That's just first 4 00:00:12,200 --> 00:00:15,120 Speaker 1: principles of economics. If wage growth continues to pick up, 5 00:00:15,120 --> 00:00:17,200 Speaker 1: as I expect it will, if that's going to be 6 00:00:17,239 --> 00:00:20,520 Speaker 1: increasingly uncomfortable having raps close to zero. As long as 7 00:00:20,560 --> 00:00:24,320 Speaker 1: the American company continue to hire and Bill's continue to expand, 8 00:00:24,360 --> 00:00:26,599 Speaker 1: will be fine, and every indication is that they will. 9 00:00:26,760 --> 00:00:31,080 Speaker 1: Bloomberg Surveillance your link to the world of economics, finance 10 00:00:31,160 --> 00:00:34,920 Speaker 1: and investment on Bloomberg Radio. Good Morning, Everyone's job today. 11 00:00:34,960 --> 00:00:37,760 Speaker 1: Michael McKee and Tom Keen. You heard from Robert Gordon, 12 00:00:37,920 --> 00:00:43,040 Speaker 1: Alan Krueger, Michael Darda. Next, Mickey Levy of Barenberg Capital Markets. 13 00:00:43,080 --> 00:00:47,080 Speaker 1: We are not Europe, we are not Japan. His optimism 14 00:00:47,200 --> 00:00:51,600 Speaker 1: on our ability to move forward within this American economy. 15 00:00:51,680 --> 00:00:56,560 Speaker 1: A very important program. Note one thirty this afternoon, Governor 16 00:00:56,640 --> 00:00:59,680 Speaker 1: Romney will be interviewed by our Mark Helper and this 17 00:00:59,760 --> 00:01:03,560 Speaker 1: is what question the important political interview of the day. 18 00:01:03,880 --> 00:01:08,240 Speaker 1: Helper in Romney worldwide radio and television. Look for that 19 00:01:08,280 --> 00:01:11,880 Speaker 1: at one thirty this afternoon. I did watch Governor Romney's 20 00:01:12,640 --> 00:01:18,720 Speaker 1: remarks yesterday and Mr Trump's reaction to them, and UH, 21 00:01:19,280 --> 00:01:22,440 Speaker 1: one told the truth and one to not. We never 22 00:01:22,480 --> 00:01:25,039 Speaker 1: give our opinion here is Michael McKey just skirted the 23 00:01:25,280 --> 00:01:29,000 Speaker 1: UH issues of the moment. Bloomberg surveillance were brought to 24 00:01:29,000 --> 00:01:32,560 Speaker 1: you by kone Resinneck Accounting Tax Advisory ConA RESIDEC will 25 00:01:32,560 --> 00:01:35,320 Speaker 1: provide your business with the industry inside it needs to 26 00:01:35,360 --> 00:01:39,200 Speaker 1: succeed in a dynamic a dynamic economy. Sign up for 27 00:01:39,280 --> 00:01:43,479 Speaker 1: insight and find out how at Cone Resnick dot com 28 00:01:43,560 --> 00:01:46,080 Speaker 1: c O h N R easy n I c K 29 00:01:46,200 --> 00:01:49,480 Speaker 1: cone Resnick dot com and we thank them for their support. 30 00:01:49,560 --> 00:01:51,880 Speaker 1: This is wonderfully time. Mickey Leavey is one of our 31 00:01:51,920 --> 00:01:55,000 Speaker 1: great students. He's not a FED critic because he has 32 00:01:55,080 --> 00:01:58,960 Speaker 1: too much respect for the institution. But he has always 33 00:01:59,160 --> 00:02:04,600 Speaker 1: questioned the linkage of our theory to our actions away 34 00:02:04,640 --> 00:02:07,120 Speaker 1: from theory, as we've seen for the last seven or 35 00:02:07,160 --> 00:02:10,200 Speaker 1: eight years. He is with Barrenberg Capital Marcus Robert Gordon 36 00:02:10,320 --> 00:02:13,240 Speaker 1: sitting in the chair you're in UH. Dr Levy UH 37 00:02:13,560 --> 00:02:17,920 Speaker 1: within the hour, and he is adamant about his optimism 38 00:02:18,000 --> 00:02:23,320 Speaker 1: on America even without technological progress. Carry this further to 39 00:02:23,440 --> 00:02:27,280 Speaker 1: the fear that America could become like Europe or worse, 40 00:02:27,600 --> 00:02:31,359 Speaker 1: become like Japan. You push against that. Well, the way 41 00:02:31,360 --> 00:02:35,680 Speaker 1: I push against it is, you know, the potential growth 42 00:02:35,880 --> 00:02:38,480 Speaker 1: is endogenous. I mean, if you put in place the 43 00:02:38,600 --> 00:02:42,160 Speaker 1: right policies, which include put the fet aside, When you 44 00:02:42,240 --> 00:02:46,440 Speaker 1: put in place the right policies tax and spending policies, 45 00:02:46,480 --> 00:02:50,480 Speaker 1: how you allocate national resources, regulatory environment, you can you 46 00:02:50,520 --> 00:02:54,040 Speaker 1: can have very healthy potential growth and very healthy sustained 47 00:02:54,120 --> 00:02:58,200 Speaker 1: job creation. If you put in place uh lousy policies 48 00:02:58,960 --> 00:03:05,440 Speaker 1: that her future planning and future investment, um, you know, 49 00:03:05,480 --> 00:03:07,680 Speaker 1: then you're gonna have very weak growth. So it's up 50 00:03:07,680 --> 00:03:10,400 Speaker 1: to our policy makers. And I think that's the beginning 51 00:03:10,680 --> 00:03:12,920 Speaker 1: and end of it. I wish, I wish the policy 52 00:03:12,960 --> 00:03:15,560 Speaker 1: makers would really talk about the policies, but they don't 53 00:03:15,639 --> 00:03:18,639 Speaker 1: and they won't and they aren't. So what can the 54 00:03:18,639 --> 00:03:21,639 Speaker 1: FED or anyone else do in the absence of that. 55 00:03:23,280 --> 00:03:27,040 Speaker 1: Not much? Okay. So, so the bottom line is, you know, 56 00:03:27,160 --> 00:03:32,240 Speaker 1: monetary policy cannot by stimulating create permanent jobs, and it 57 00:03:32,320 --> 00:03:35,760 Speaker 1: can't lift long run potential growth. The e c B 58 00:03:35,960 --> 00:03:39,520 Speaker 1: is obviously a financial backstop for Europe, but Europe has 59 00:03:39,600 --> 00:03:41,840 Speaker 1: put in place some countries are put in place performs 60 00:03:41,880 --> 00:03:46,000 Speaker 1: in the United States. Um, all of the you know, 61 00:03:46,600 --> 00:03:50,120 Speaker 1: disappointment about the you know, the moderate rate of growth 62 00:03:50,120 --> 00:03:52,400 Speaker 1: in the last six years has nothing to do with 63 00:03:52,480 --> 00:03:55,760 Speaker 1: FED policy. It has to do with other policies that 64 00:03:55,840 --> 00:03:59,760 Speaker 1: are you know, coming up the credit channels and constraining 65 00:04:00,480 --> 00:04:05,240 Speaker 1: you know, business and investment and planning for the future. Well, 66 00:04:06,520 --> 00:04:08,600 Speaker 1: what would you say to the argument that some people 67 00:04:08,640 --> 00:04:11,560 Speaker 1: make that the FED is in a way complicit with 68 00:04:11,640 --> 00:04:18,760 Speaker 1: this situation because their extraordinary policies have enabled Congress and 69 00:04:18,880 --> 00:04:23,200 Speaker 1: policymakers on the fiscal side to avoid doing anything. Mike, 70 00:04:23,240 --> 00:04:26,360 Speaker 1: I think that's I think that's a very valid point. Um. 71 00:04:26,440 --> 00:04:30,680 Speaker 1: We all know that the quantitative easing and and and um, 72 00:04:30,760 --> 00:04:33,360 Speaker 1: they're all their efforts to keep bond yields low has 73 00:04:33,440 --> 00:04:35,559 Speaker 1: kind of gotten Congress off the hook, so they haven't 74 00:04:35,600 --> 00:04:39,120 Speaker 1: Congress hasn't been forced to reform. Also, I think there's 75 00:04:39,200 --> 00:04:46,839 Speaker 1: this this broader problem that everybody, including policymakers, financial markets, 76 00:04:47,200 --> 00:04:50,719 Speaker 1: and the economic and financial media look to the FED 77 00:04:50,880 --> 00:04:53,440 Speaker 1: to solve all the problems, and they're not able to. 78 00:04:53,720 --> 00:04:57,239 Speaker 1: If you look at the last six years, the FED 79 00:04:57,880 --> 00:05:00,840 Speaker 1: has not been able to stimulate aggregate demand. Any helped 80 00:05:00,880 --> 00:05:03,560 Speaker 1: me with the idea that we move from ten percent 81 00:05:03,680 --> 00:05:07,240 Speaker 1: to five percent unemployment Dean Mackie at point seven two, 82 00:05:07,320 --> 00:05:10,120 Speaker 1: suggesting we get to the vicinity of four point zero. 83 00:05:10,480 --> 00:05:14,359 Speaker 1: I saw one person quoted three nine out into the distance. 84 00:05:14,839 --> 00:05:17,640 Speaker 1: My I should feel better there to leave you. Why 85 00:05:17,680 --> 00:05:22,880 Speaker 1: don't we feel better if the vectors in a wonderful direction? Well, 86 00:05:22,920 --> 00:05:25,839 Speaker 1: I think that's a very valid question, and I and 87 00:05:25,880 --> 00:05:28,520 Speaker 1: I have a hard time answering it because, as you know, 88 00:05:28,880 --> 00:05:32,280 Speaker 1: the unemployment rate has come down, you six, has has 89 00:05:32,360 --> 00:05:37,960 Speaker 1: come way way down UM adjusted for inflation. Of course, 90 00:05:38,040 --> 00:05:43,200 Speaker 1: real wages UM have been you know, increasing UM. Now, 91 00:05:43,680 --> 00:05:47,440 Speaker 1: the one of the questions is UM, who gets credit 92 00:05:47,520 --> 00:05:51,400 Speaker 1: for this? And I would argue that we're just distancing 93 00:05:51,400 --> 00:05:55,080 Speaker 1: ourselves from the financial crisis. UM. And if you look 94 00:05:55,200 --> 00:06:01,040 Speaker 1: at UM aggregate demand or nominal GDP growth, it hasn't 95 00:06:01,040 --> 00:06:03,799 Speaker 1: been the FED that that that that that could rightly 96 00:06:03,800 --> 00:06:05,800 Speaker 1: take credit for all this. It's just the economy is 97 00:06:05,920 --> 00:06:11,280 Speaker 1: growing modestly. But yours is a good question, UM, the 98 00:06:11,400 --> 00:06:14,760 Speaker 1: US economy, we would like it to be growing faster. 99 00:06:14,920 --> 00:06:17,559 Speaker 1: And I can think of some policies that would would 100 00:06:17,560 --> 00:06:22,080 Speaker 1: really lift its rate of growth. But we're doing just 101 00:06:22,160 --> 00:06:25,239 Speaker 1: a lot better than than than we have been. Okay, 102 00:06:25,240 --> 00:06:28,360 Speaker 1: will buy give me a couple of policies. Oh boy, 103 00:06:28,880 --> 00:06:33,000 Speaker 1: I I would love to see the next president, regardless 104 00:06:33,200 --> 00:06:38,039 Speaker 1: of of UM who who that is, UM, sit down 105 00:06:38,040 --> 00:06:41,720 Speaker 1: and say, Okay, my first objective is corporate tax reform, 106 00:06:42,080 --> 00:06:46,520 Speaker 1: and let's um and let's get people from both sides 107 00:06:46,560 --> 00:06:49,359 Speaker 1: of the political aisle and talk about and build a 108 00:06:49,360 --> 00:06:52,800 Speaker 1: base on what we agree on rather than focusing on 109 00:06:52,839 --> 00:06:56,279 Speaker 1: the polemics UM. And I think that would that would 110 00:06:56,360 --> 00:06:59,000 Speaker 1: really lift a gray a gray cloud. And I think 111 00:06:59,040 --> 00:07:01,440 Speaker 1: it would be pretty easy cebes. I think reasonable people 112 00:07:01,440 --> 00:07:04,280 Speaker 1: on both sides of the political aisle, you know, agree 113 00:07:04,320 --> 00:07:07,160 Speaker 1: on large portions of what needs to be done on 114 00:07:07,400 --> 00:07:12,080 Speaker 1: corporate taxes. And that's that's just the beginning. Another concern 115 00:07:12,160 --> 00:07:16,440 Speaker 1: I have, uh lurking beneath the surface that I think 116 00:07:16,480 --> 00:07:19,720 Speaker 1: has definitely had a negative impact on on the pace 117 00:07:19,760 --> 00:07:24,440 Speaker 1: of economic growth, particularly capital spending, is the growing web 118 00:07:24,960 --> 00:07:31,560 Speaker 1: of the regulations. And it's not the things we see 119 00:07:31,600 --> 00:07:35,520 Speaker 1: in the headlines. It's the fine print and the implementation 120 00:07:35,720 --> 00:07:39,040 Speaker 1: of a lot of regulations, not in the financial sector, 121 00:07:39,080 --> 00:07:42,720 Speaker 1: but in the non financial sector. That is on the margin, 122 00:07:43,200 --> 00:07:47,800 Speaker 1: leading businesses in a number of industries to temper back 123 00:07:47,880 --> 00:07:52,200 Speaker 1: their expectations. Just published moments ago, Thomas said, so the 124 00:07:52,240 --> 00:07:56,080 Speaker 1: Great Liberal an essay in the New York Times on 125 00:07:56,400 --> 00:07:59,960 Speaker 1: Mr Trump and all Mark Mike, Mike McKinnon and Mickey Lee. 126 00:08:00,640 --> 00:08:04,920 Speaker 1: There's a wonderful statistic in here from Lucas Caravan Unas 127 00:08:04,960 --> 00:08:09,400 Speaker 1: of Booth Schools Chicago. Mike, you just attended their wonderful panel. 128 00:08:10,280 --> 00:08:14,560 Speaker 1: Labor share of our economy is down twelve percent from 129 00:08:14,640 --> 00:08:20,840 Speaker 1: six to I mean, that's that's a structural change. With 130 00:08:20,960 --> 00:08:25,679 Speaker 1: Larry Summers talks about secular stagnation, that's the definition labor 131 00:08:25,760 --> 00:08:29,880 Speaker 1: is getting a smaller pie. Why is that, Dr Levy? 132 00:08:29,920 --> 00:08:33,840 Speaker 1: Why is it? Is it that we've innovated ourselves out 133 00:08:33,880 --> 00:08:41,040 Speaker 1: of jobs formation sixty nine to over a generation. I 134 00:08:41,080 --> 00:08:43,000 Speaker 1: think part of the reason is the change in the 135 00:08:43,080 --> 00:08:49,160 Speaker 1: composition of GDP higher higher portion is in service producing industries. 136 00:08:49,320 --> 00:08:51,760 Speaker 1: Some of what your high productivity, high paying jobs, but 137 00:08:51,880 --> 00:08:57,400 Speaker 1: but a large number are in lower productivity jobs that 138 00:08:57,559 --> 00:09:02,200 Speaker 1: command or or are associated with lower wages. And I 139 00:09:02,240 --> 00:09:05,160 Speaker 1: think that's that's clearly one of the factors. The other 140 00:09:05,360 --> 00:09:10,040 Speaker 1: is the measurement issue. Okay, UM, there is a growing 141 00:09:10,120 --> 00:09:16,520 Speaker 1: wedge between business costs of employing people and those workers 142 00:09:16,559 --> 00:09:20,760 Speaker 1: take home pay. And so if that decline in the 143 00:09:20,880 --> 00:09:25,120 Speaker 1: labor share of g d p M reflects just take 144 00:09:25,160 --> 00:09:29,440 Speaker 1: home pays unit and I think I think that's important 145 00:09:29,520 --> 00:09:31,480 Speaker 1: and and and and so this is one of the 146 00:09:31,559 --> 00:09:35,880 Speaker 1: areas where UM, I would love to see higher productivity 147 00:09:35,920 --> 00:09:40,000 Speaker 1: and higher compensation for for skilled workers. Were got to 148 00:09:40,000 --> 00:09:41,840 Speaker 1: do that, Bigue leader. We're gonna come back on what 149 00:09:41,920 --> 00:09:43,560 Speaker 1: has been the theme through the morning, which is the 150 00:09:43,559 --> 00:09:47,040 Speaker 1: efficiency of the economy. The productivity of the economy. As 151 00:09:47,080 --> 00:09:49,920 Speaker 1: you all know, it's flat on its Like Mike has said, Okay, 152 00:09:50,000 --> 00:09:51,800 Speaker 1: I mean you and I don't have real jobs. We 153 00:09:51,840 --> 00:09:57,079 Speaker 1: know that. We go from Greenspan, Vin Weber, the Senator 154 00:09:57,120 --> 00:10:01,320 Speaker 1: for New Answer, Judd Gregg, Robert Gordon, Alan Krueger, Michael 155 00:10:01,400 --> 00:10:06,440 Speaker 1: Darda Levy onto a guy named Gross. I mean this 156 00:10:06,520 --> 00:10:08,600 Speaker 1: is pretty good. I'm like, this is pretty good. And 157 00:10:08,720 --> 00:10:10,240 Speaker 1: the great thing is we get to share it with 158 00:10:10,280 --> 00:10:13,240 Speaker 1: all of you listening. And yeah, stay tuned, because what 159 00:10:13,360 --> 00:10:16,000 Speaker 1: a great children And it's out on our podcast. We're 160 00:10:16,040 --> 00:10:19,800 Speaker 1: pleased to renounce again free and you can subscribe iTunes. 161 00:10:20,520 --> 00:10:23,880 Speaker 1: Mickey Levy. Not only the entire show for those that 162 00:10:24,000 --> 00:10:28,000 Speaker 1: desire that, but individual podcasts is well. We've had a 163 00:10:28,080 --> 00:10:30,000 Speaker 1: huge jump start to this and hope to roll it 164 00:10:30,040 --> 00:10:34,200 Speaker 1: out over the next coming days. Again, an important interview 165 00:10:34,400 --> 00:10:38,600 Speaker 1: one thirty this afternoon, Mark Helpred in conversation with a 166 00:10:38,640 --> 00:10:43,240 Speaker 1: former governor of the Commonwealth of Massachusetts, Mitt Romney. Look 167 00:10:43,280 --> 00:10:46,520 Speaker 1: for that at one thirty uh this afternoon. Without question, 168 00:10:46,760 --> 00:10:53,560 Speaker 1: the interview of the day. Time out a check with 169 00:10:53,559 --> 00:10:56,199 Speaker 1: Blacael bar and get the latest world and national headlines. Michael, 170 00:10:56,280 --> 00:10:59,360 Speaker 1: Mike Tom, thank you very much. Donald Trump's Republican presidential 171 00:10:59,440 --> 00:11:03,559 Speaker 1: rivals aim out swinging at last night's debate. The echoed 172 00:11:03,600 --> 00:11:08,080 Speaker 1: party establishment figures that Trump is a phony, but Trump, 173 00:11:08,240 --> 00:11:12,520 Speaker 1: Marco Rubio, Ted Cruz and John Kasik all said at 174 00:11:12,520 --> 00:11:14,800 Speaker 1: the end of the debate that they would support the nominee. 175 00:11:15,360 --> 00:11:19,160 Speaker 1: Brazilian police are questioning former President Louis Ignatio Lula da 176 00:11:19,160 --> 00:11:22,920 Speaker 1: Silva in a corruption case. Police are also searching his home. 177 00:11:23,480 --> 00:11:28,520 Speaker 1: Diamond smuggling has caused Zimbabwe's economy more than thirteen billion 178 00:11:28,600 --> 00:11:32,880 Speaker 1: dollars as according to zimbabwe President Robert Mgabe, the state 179 00:11:33,000 --> 00:11:35,360 Speaker 1: has created a new company to take control of the 180 00:11:35,360 --> 00:11:39,320 Speaker 1: controlling mining global news twenty four hours a day, powered 181 00:11:39,320 --> 00:11:42,760 Speaker 1: by our journalists more than a hundred fifty news bureaus 182 00:11:42,800 --> 00:11:45,240 Speaker 1: from around the world. Michael Barr, Mike, Tom, and Michael, 183 00:11:45,240 --> 00:11:48,120 Speaker 1: thanks so much. We are fifteen making nineteen minutes away 184 00:11:48,160 --> 00:11:50,520 Speaker 1: from the Jazz Report again. Beneath the headline data with 185 00:11:50,600 --> 00:11:54,160 Speaker 1: Mickey Leany Barrenberg Capital Markets, and then Bill Gross of 186 00:11:54,240 --> 00:11:57,679 Speaker 1: Janice at Capital coming up next. This is what we 187 00:11:57,720 --> 00:12:01,640 Speaker 1: want to talk about, the lack of Amy productivity. This 188 00:12:01,720 --> 00:12:08,280 Speaker 1: is Bloomberg's surveillance. This news update brought to you by 189 00:12:08,320 --> 00:12:10,680 Speaker 1: the New York Community Trust, where donors like you help 190 00:12:10,760 --> 00:12:12,120 Speaker 1: them make New York better.